Unsecured Business Overdraft Rates in 2026: What to Expect

If you are looking at an unsecured business overdraft in 2026, the first thing you want to know is the rate. The short answer: expect to pay between 18% and 25% p.a. on the amount you actually draw down. That is higher than a secured facility, but there is a good reason for it, and there are ways to bring it down. Here is the full breakdown.

Current Unsecured Business Overdraft Rates in Australia (2026)

Across the non-bank lenders on our panel, unsecured business overdraft rates in 2026 sit in three bands depending on your business profile.

These rates apply to the drawn balance only. If you have a $100,000 facility and draw $40,000, interest is calculated on $40,000. The undrawn portion does not attract interest, though it does attract a line fee (more on that below).

Why Unsecured Rates Are Higher Than Secured Rates

The difference comes down to one thing: risk. When a lender takes property as security, they have a fallback. If the business defaults, the lender can sell the property to recover their money. That security reduces the lender's exposure.

With an unsecured facility, the lender has no property to sell. Their only recourse is the personal guarantee signed by company directors. Personal guarantees are harder to enforce and take longer to recover against. The lender prices that additional risk into the interest rate.

In practical terms, the gap between secured and unsecured rates is typically 6-10 percentage points. A business that qualifies for a secured overdraft at 12% p.a. might pay 20% p.a. for the same facility unsecured.

That said, the unsecured option still makes financial sense for many businesses. If you do not own property, or you do not want to put your home on the line, the extra interest cost is the price of keeping your assets separate from your business debt.

Line Fees and Other Costs

Interest is not the only cost on an unsecured business overdraft. Here are the fees you should budget for.

Line Fee (Facility Fee)

Charged on your total approved limit, not just what you draw. Typically 1% to 2% p.a. of the facility limit. On a $100,000 facility at 1.5% p.a., that is $1,500 per year or roughly $125 per month, regardless of whether you use the facility or not.

Establishment Fee

A one-off fee when the facility is first set up. Usually 1-3% of the facility limit. On a $100,000 facility, expect $1,000 to $3,000.

Monthly Account Fee

Some lenders charge a flat monthly fee of $10 to $30 for account maintenance. Not all lenders charge this, so it is worth comparing.

Early Termination Fee

If you close the facility before the agreed term (usually 12 months), some lenders charge a break fee. This varies by lender but is typically 1-2% of the facility limit.

When comparing overdraft options, always look at the total cost including fees, not just the headline interest rate. A facility with a lower rate but higher fees can cost more overall.

How to Get the Lowest Rate on an Unsecured Overdraft

Your rate is not fixed by the market. It is set by how the lender assesses your risk. Here is what moves the needle.

• Higher credit score. An Equifax score above 650 opens up better pricing. Above 700, you are in the best tier. Check your score before applying through Equifax for free.
• Longer trading history. Lenders want to see stability. 2+ years of trading puts you in a stronger position than 6-12 months.
• Higher monthly revenue. $50K+ per month signals a business that can service the debt comfortably. The higher your revenue relative to the facility size, the lower your rate.
• Clean bank statements. No dishonoured payments, no gambling transactions, consistent deposits. Lenders read your bank statements closely.
• Low existing debt. If you already have business loans, credit cards or other facilities, the total debt relative to your income matters. Less existing debt means a better rate.
• Use a broker. A specialist broker like OverdraftMe submits to multiple lenders at once. When lenders know they are competing, pricing tends to sharpen.

Worked Example: $100K Unsecured Facility

Here is what a typical unsecured business overdraft actually costs in practice.

The Setup

• Facility limit: $100,000
• Average drawn balance: $45,000
• Interest rate: 22% p.a.
• Line fee: 1.5% p.a. on the full $100,000
• Establishment fee: 2% ($2,000, one-off)

Weekly Cost Breakdown

Interest on $45,000 at 22% p.a. = $9,900 per year = approximately $190 per week.

Line fee on $100,000 at 1.5% p.a. = $1,500 per year = approximately $29 per week.

Total ongoing cost: roughly $219 per week while $45,000 is drawn.

If you draw less, you pay less interest. If you repay the full balance, you pay only the line fee. That flexibility is the main advantage of an overdraft over a fixed term business loan, where you pay interest on the full amount for the entire term.

Unsecured vs Secured Overdraft Rates: Side by Side

For businesses that own property and want the lowest possible rate, a secured overdraft will cost less in interest. But the upfront costs (valuation, legal, registration) add $2,000 to $5,000, and the approval takes weeks instead of hours. For a facility under $150,000 that you need quickly, unsecured often works out better when you factor in the total cost and time value.

Read the full comparison in our unsecured overdraft guide, or download the unsecured overdraft factsheet for a one-page summary.

What Happens at Renewal

Most unsecured overdraft facilities run for 12 months. At renewal, the lender reviews your account conduct, updated bank statements and credit file. If your business has performed well, you may get a rate reduction. If there have been missed payments or declining revenue, the rate could increase or the facility may not be renewed.

Good account conduct over 12 months is the single best way to get a lower rate at renewal. Lenders reward businesses that draw and repay consistently without going over the limit or missing payments.

For more detail on how overdraft facilities work, see our business overdraft factsheet or check if you qualify using our approval checker.